Abstract:

Statistically speaking, only between 4% and 6% individuals can afford to retire comfortably. When this fact
is combined with changes such as a longer life expectancy, disintegration of family life and increasing
pressure on public resources to deal with issues such as aids, the increasing need for personal financial
planning for retirement becomes clear.
Firstly, a framework was set of requirements which need to be met with regard to financial planning for
retirement. This includes the need to diversify the portfolio (as a method to manage the acceptable risk
level), as well as principles and techniques relating to diversification. The possibility of using the services of
a financial planner to aid with the retirement planning, as well as aspects to be considered in this regard were
discussed. It was also demonstrated that a variety of aspects should be considered when deciding on an
investment, including market expectations, general economic conditions and the investor's own research, all
within a long-term framework. The final aspect considered as part of the framework, was tax.
Having set the framework for successful financial retirement planning in Chapter two, a number of pitfalls to
be avoided were addressed in Chapter three. These included the investor's planned annual cost of living,
since this is the single most important factor which will determine standard of living during retirement. The
planned age at which the individual wishes to retire specifically also needs to be taken into account, seeing
that this determines the amount of time he has to build up his investment. The planned rate of return on the
investment has to be realistic, but also has to at least keep up with inflation. The effect of inflation could also
for example mean that adequate present planning may fall short in 20 years' time. A final aspect to be
considered is the importance of taking unforeseen events, such as a potential medical disability, into account.
Having set the framework of factors to be taken into account, specific investment options were addressed in
the main categories of equity, bonds, property and cash, as well as a pension find, provident fund and/or
retirement annuity. Less traditional options such as collector's items, financial instruments or the option to
start one's own business were also addressed in more detail.
Finally, a questionnaire was addressed to professional people, as represented by auditors in the Northwest
Province, with the view to determine the current level of retirement planning and whether or not their
expectations matched the theoretic framework as discussed in the previous chapters.
Suggestions were made as per the results of the questionnaire by linking the results of the questionnaire and
the theoretical framework. Gaps were also highlighted, for instance that very few people as per the sample
plan to fully retire, and this changing understanding of "retirement" is not fully captured by current literature.
It also seems that professional persons, as per the questionnaire, have an over optimistic view regarding their
retirement and funds needed during retirement.